Dollar stronger, Shanghai Composite in red, as HSBC China PMI disappoints

On Tuesday the greenback rose versus its peers after a top U.S. Federal Reserve official said it should wait no more than a few months before considering an interest rate hike.

Market participants also attributed the dollar's surge to technical factors and said the greenback may face further long liquidation after the Fed signaled last week that it is in no rush to tighten monetary policy, Reuters reports

At the same time, the dollar index remains well below its near 12-year high of 100.39 set earlier in March.

According to traders, the dollar gained after San Francisco Fed chief John Williams reiterated that the Fed should seriously discuss raising rates by mid-year.

On Monday the greenback had obtained little support from comments by Fed officials, some of whom appeared to fall in line with the March 18 policy statement that suggested a less aggressive timetable for hiking rates.

Fed Vice Chair Stanley Fischer said the central bank was "widely expected" to begin raising rates this year though the policy path remains uncertain, with the latter rather than the former drawing more attention from the wary market.

Currencies

The euro lost 0.1 percent versus the dollar to around $1.0931 EUR=, having slipped off an intraday high of $1.0968, which was just short of Monday's peak at $1.0972.

The dollar eased 0.1 percent against the yen to about 119.65 yen JPY=, near the bottom of its 122.04 yen to 119.29 yen range seen over the past couple of weeks

The Aussie dollar declined briefly after a survey showed that activity in China's factory sector dipped to a 11-month low in March.

The Australian dollar touched an intraday low of $0.7835 right after the release of the China flash HSBC PMI, but later came off that trough. It last traded at $0.7868 AUD=D4, down 0.2 percent on the day, but back around levels seen ahead of the PMI survey.

China PMI

Meanwhile, China HSBC Manufacturing PMI registered at 49.2 in March, way below expectations of 50.5, representing an 11-month low.

Annabel Fiddes, Economist at Markit said: “The HSBC Flash China Manufacturing PMI signalled a slight deterioration in the health of China’s manufacturing sector in March. A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers."

As FXStreet reports, Shanghai Composite is headed for its first losing session in 10 days after a surprisingly disappointing HSBC flash PMI. Manufacturing was expected to expand for the 2nd consecutive month but instead plunged into contraction, falling to its lowest level in 11 months.